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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Management Resource Solutions Plc | LSE:MRS | London | Ordinary Share | GB00B8BL4R23 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.30 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMMRS
RNS Number : 8045J
Management Resource Solutions PLC
07 December 2018
Management Resource Solutions PLC
("MRS" the "Company" or the "Group")
Final Results
Continued progress, well placed for future growth
Management Resource Solutions PLC, a leading Maintenance, Fabrication, Civil and Earthworks company, announces its Final Results for the year ended 30 June 2018.
Financial Highlights
-- Trading performance in line with expectations -- Revenue up 32% to $69.1m (2017: $52.4m) -- EBITDA of $12.3m (2017: loss of $4.9m) -- Net profit after tax of $5.4m (2017: net loss after tax of $10.8m) -- Basic EPS of AUD3.02c (2017:AUD(12.99c))
* All references to dollars or $ relate to Australian dollars, the Group's presentational currency
Operational Highlights
-- A year of progress with significant cost management initiatives put in place -- Continued investment into people and core profitable assets
-- Bachmann Plant Hire operating close to full utilisation during period, continued positive momentum
-- Strong first full year performance from MRS Services Group with strong end market demand for specialist services
Paul Brenton, CEO of MRS, commented:
"2018 was a busy and successful year for MRS, as the Group benefited from a number of initiatives to turn around the business and drive a strong performance. The new management team have worked hard to make the business leaner and fitter, with a disciplined focus on controlling costs and leveraging the Group's central processes in order to deliver sustainable profit and returns.
"Along with the internal measures taken to put the Company on a secure footing, we have seen strong market demand for the Group's specialist services. Record government spending on core civil infrastructure and strong growth in the construction sector has driven demand within our Bachmann Plant Hire business. As market dynamics have improved within the resources sector, our MRS Services Group business has also continued to drive growth, thanks to the breadth and depth of its sector and technical expertise.
"We have started the new year in line with management expectations and are confident about the Group's prospects and the opportunity ahead. We have an excellent management team in place, along with talented people and leading market positions, which I believe leaves MRS well placed to drive future growth and create value for all stakeholders."
Enquiries:
Management Resource Solutions plc via FTI Consulting John Zorbas, Chairman Tel: +44 (0) 20 3727 1000 Paul Brenton, CEO Tim Jones, Finance Director Northland Capital Partners Limited (NOMAD & Tel: +44 (0) 20 3861 6625 Broker) David Hignell Gary Beaney Jamie Spotswood Peterhouse Corporate Finance Limited Tel: +44 (0) 20 7469 0932 (Joint Broker) Charles Goodfellow Lucy Williams FTI Consulting (Financial PR) Tel: +44 (0) 20 3727 1000 Alex Beagley James Styles Laura Saraby
Notes to Editors
Management Resource Solutions PLC (MRS), through its subsidiaries Bachmann Plant Hire and MRS Services Group, offers plant hire, equipment repair, refurbishment and fabrication, mine rehabilitation, earthmoving, road construction and other support services to a wide base of private and public sector clients in Australia. MRS caters predominately for the mining, civil engineering, construction and infrastructure industries.
Further information on the Company can be found at http://www.mrsplc.info.
Directors John Zorbas Chairman Paul Brenton Chief Executive Officer Timothy Jones Finance Director Company secretary Timothy Jones Registered number 08046513 Registered office Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS, United Kingdom Australian office 2/2 Market Street, Newcastle, NSW 2300, Australia Nominated adviser and joint broker Northland Capital Partners Limited: 40 Gracechurch Street, London, EC3V 0BT United Kingdom Joint broker Peterhouse Corporate Finance Limited: 15-17 Eldon Street, London, EC2M 7LD, United Kingdom Auditors James Cowper Kreston: Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS, United Kingdom Solicitors as to English Law Memery Crystal LLP: 44 Southampton Buildings, London, WC2A 1AP, United Kingdom Solicitors as to Australian Law McCullough Robertson: 66 Eagle Street, Brisbane, QLD 4000, Australia Share registry Equiniti: Aspect House Spencer Road, Lancing, West Sussex, BN99 6DA, United Kingdom Websites www.mrsplc.info www.mrsplc.net www.bph.net.au www.mrssg.net
CHAIRMAN'S STATEMENT AND STRATEGIC REPORT
Dear Shareholders,
Financial Results and Financial Key Performance Indicators
All references to dollars or $ relate to Australian dollars, the Group's presentational currency.
I am pleased to report a strong set of results for the financial year to 30 June 2018 ('FY18' or '2018'), in line with management expectations. Net profit after tax of $5.4m (2017: net loss after tax $10.8m) on revenue of $69.1m (2017: $52.4m) reflects the restructuring and cost saving initiatives put in place during 2017 and the strong, clear direction of the Company under new management during the period.
FY18 has seen the Company deliver much improved results, with a strong revenue and profit performance as both of the Group's businesses delivered 12 month contributions. A major factor in these results was the significant cost reduction programme initiated in late 2017, which continued throughout the 2018 financial year. As Group revenue strengthened these cost savings were largely achieved through a strong focus on leveraging the Group's central processes and controlling overheads.
Net Profit / (Loss) After Tax - A$'000
Hot Features
Premium
FY18 FY17
----------------------------------------------------
Total
Operating Restructuring Discontinued FY17
-------- ---------- -------------- ------------- ---------
MRS PLC (1,433) (1,182) (3,877) (5,592) (10,652)
-------- ---------- -------------- ------------- ---------
Holdings (MRS) Pty
Ltd (2,055) (462) 346 (1,647) (1,764)
----------------------- -------- ---------- -------------- ------------- ---------
MRS Property No1
Pty Ltd (9) - - - -
----------------------- -------- ---------- -------------- ------------- ---------
BPH 3,951 1,503 - (1,548) (45)
----------------------- -------- ---------- -------------- ------------- ---------
MRSSG 4,969 (6,404) (1,029) (25) (7,459)
----------------------- -------- ---------- -------------- ------------- ---------
MRS Pty Ltd - - - 7,847 7,847
----------------------- -------- ---------- -------------- ------------- ---------
MRS Guernsey Limited - - - 718 718
----------------------- -------- ---------- -------------- ------------- ---------
MRS PNG Limited - - - 570 570
----------------------- -------- ---------- -------------- ------------- ---------
Net profit/(loss)
after tax 5,423 (6,545) (4,560) 323 (10,785)
----------------------- -------- ---------- -------------- ------------- ---------
Trading Review - Bachmann Plant Hire Pty Ltd
Bachmann Plant Hire Pty Ltd ("BPH") is based in Ipswich, approximately 40km west of Brisbane (Queensland), and specialises in providing bulk earthworks to the construction and infrastructure sectors, generally throughout South East Queensland. BPH delivers wet hire services (plant is accompanied with operators) which is completed through either an hourly wet hire arrangement or performed at a bulk cubic metre rate, which is often referred to as contract work.
The Ipswich Economic Development Plan 2016 to 2031, enacted by the Queensland Government, is an ambitious plan to attract 292,000 people to 20 employment and population growth areas in the vicinity of Ipswich, resulting in an additional 120,000 jobs. More than 500 new residential dwellings are required to be completed every month to achieve the plan, resulting in the fastest growing residential growth corridor in Australia.
BPH has a 50-year history and an experienced workforce of long-term employees, and is perfectly located to exploit these opportunities. Most contracts are based on bulk earthworks within a small, well defined area of a residential or commercial sub-division to a final level finish of +/- 50mm. Although operations can be hampered by excessive rainfall, overall BPH operates in a relatively low risk contracting environment. Whilst contracts are generally relatively short (two to six months in length), there is a steady pipeline of work to complete going forward.
FY18 was another strong year for BPH, with a net profit after tax of $4.0m (FY17: NPAT from continuing business of $1.5m) on Revenue of $22.5m (FY17 $22.2m). During FY18, BPH's Plant & Equipment operated at close to full utilisation and BPH benefited as a result of having no distractions and unnecessary costs associated with the discontinued operations from FY17. This has enabled BPH to focus on minimising operating costs and leveraging the Group's central processes.
BPH $'000s 1H17 2H17 FY17 1H18 2H18 FY18
-------- -------- --------- -------- -------- ---------
(excluding discontinued
operations)
-------------------------- -------- -------- --------- -------- -------- ---------
Revenue 11,705 10,504 22,208 10,423 12,117 22,540
-------------------------- -------- -------- --------- -------- -------- ---------
Cost of Sales (8,849) (8,684) (17,533) (6,611) (7,823) (14,434)
-------------------------- -------- -------- --------- -------- -------- ---------
GM 2,856 1,820 4,675 3,812 4,294 8,106
-------------------------- -------- -------- --------- -------- -------- ---------
GM (%) 24.4% 17.3% 21.1% 36.6% 35.4% 36.0%
-------------------------- -------- -------- --------- -------- -------- ---------
Operating costs (1,577) 1,989 413 (388) (373) (761)
-------------------------- -------- -------- --------- -------- -------- ---------
EBITDA 1,279 3,809 5,088 3,424 3,921 7,345
-------------------------- -------- -------- --------- -------- -------- ---------
EBITDA (%) 11.0% 36.0% 23.0% 33.0% 32.0% 33.0%
-------------------------- -------- -------- --------- -------- -------- ---------
Depreciation (1,164) (1,675) (2,839) (1,588) (1,557) (3,145)
-------------------------- -------- -------- --------- -------- -------- ---------
Operating profit/(loss) 115 2,134 2,249 1,836 2,364 4,200
-------------------------- -------- -------- --------- -------- -------- ---------
Interest received/(paid) - (222) (222) (79) (61) (140)
-------------------------- -------- -------- --------- -------- -------- ---------
Net profit/(loss) before
tax 115 1,913 2,027 1,757 2,303 4,060
-------------------------- -------- -------- --------- -------- -------- ---------
Tax (853) 329 (524) - (109) (109)
-------------------------- -------- -------- --------- -------- -------- ---------
Net profit/(loss) after
tax (738) 2,242 1,503 1,757 2,194 3,951
-------------------------- -------- -------- --------- -------- -------- ---------
Trading Review - MRS Services Group Pty Ltd
MRS Services Group Pty Ltd (MRSSG) is strategically located in the heart of the coal mining region of the Hunter Valley in New South Wales, approximately 125km North West of the coal exporting port of Newcastle and approximately 240km north of Sydney. Some 90% of revenues are derived from blue chip mining companies including Yancoal, New Hope, BHP and Glencore. Demand for high quality coal (containing high energy content with low ash and pollutants) from the Hunter Valley remains strong, in particular for export to China and East Asia where over 1,000 new High Energy Low Emissions (HELE) Ultra-Supercritical Coal Fired Power Stations are planned or under construction.
The majority of MRSSG's work in the Hunter Valley is low risk, derived from selling trade labour at hourly rates. The fabrication and mine rehabilitation businesses are based on longer-term contracts in well-established work relationships and well understood risk profiles.
FY18 is the first full year of contribution from MRSSG to the Group. MRSSG contributed a net profit after tax of A$5.0m on revenue of A$46.2m (2017: net loss after tax $7.4m over nine months). MRSSG also benefited in FY18 from no distractions and unnecessary costs associated with the discontinued operations from FY17, enabling a focus on minimising operating costs and leveraging the Group's central processes. The business also benefited significantly from a reduction in overhead costs and from the recognition of FY17 tax losses in FY18 offsetting any tax expense.
MRSSG $'000s 1H17 2H17 FY17 1H18 2H18 FY18
-------- --------- --------- --------- --------- ---------
(excluding discontinued
operations)
-------------------------- -------- --------- --------- --------- --------- ---------
Revenue 9,073 20,988 30,061 23,138 23,024 46,162
-------------------------- -------- --------- --------- --------- --------- ---------
Cost of Sales (8,664) (14,740) (23,404) (16,092) (15,743) (31,835)
-------------------------- -------- --------- --------- --------- --------- ---------
GM 409 6,248 6,657 7,046 7,281 14,327
-------------------------- -------- --------- --------- --------- --------- ---------
GM (%) 4.5% 29.8% 22.1% 30.5% 31.6% 31.0%
-------------------------- -------- --------- --------- --------- --------- ---------
Operating costs (3,314) (8,455) (11,769) (3,830) (3,430) (7,260)
-------------------------- -------- --------- --------- --------- --------- ---------
EBITDA (2,906) (2,207) (5,112) 3,216 3,851 7,067
-------------------------- -------- --------- --------- --------- --------- ---------
EBITDA (%) -32.0% -11.0% -17.0% 14.0% 17.0% 15.0%
-------------------------- -------- --------- --------- --------- --------- ---------
Depreciation (115) (453) (568) (404) (463) (867)
-------------------------- -------- --------- --------- --------- --------- ---------
Operating profit/(loss) (3,020) (2,660) (5,680) 2,812 3,388 6,200
-------------------------- -------- --------- --------- --------- --------- ---------
Interest received/(paid) (64) (1,375) (1,439) (920) (893) (1,813)
-------------------------- -------- --------- --------- --------- --------- ---------
Net profit/(loss) before
tax (3,084) (4,035) (7,119) 1,892 2,495 4,387
-------------------------- -------- --------- --------- --------- --------- ---------
Tax - (315) (315) - 581 581
-------------------------- -------- --------- --------- --------- --------- ---------
Net profit/(loss) after
tax (3,084) (4,350) (7,434) 1,892 3,076 4,968
-------------------------- -------- --------- --------- --------- --------- ---------
MRS Property No1 Pty Ltd
During FY18, MRS Property No1 Pty Ltd (PN1) purchased the land and the partially completed buildings for $3.0m which MRSSG operates from in the Hunter Valley. At the time of acquisition, the land and buildings had a valuation of $4.8m. The cost to complete the building is approximately $2.0m, which is fully funded through a construction facility. The completion of the construction is progressing well and to budget. The estimated valuation per management, of the completed facility in use, is approximately $9.0m to $10.0m.
MRS Group
Property, Plant & Equipment
During FY18, the Group invested $13.7m in Property, Plant & Equipment, with a further $2.0m in Capital Work In Progress. The majority of the capital expenditure (CAPEX) has been funded through free cash flow, new debt contributed $5.0m, with $2.0m equipment finance and $3.0m property finance. The cashflow constraints of prior years' have not allowed for CAPEX. However, during FY18 the Company has focussed on ensuring CAPEX has been invested, extending the life of the capital equipment and supporting the Group's sustainable growth.
Borrowings
With the acquisition of the Muswellbrook facility, there are now five core debt facilities:
1. Debtor Finance - BPH has a $2.6m facility, and MRSSG has a $7.0m facility (this increased in May 2018);
2. Commercial Bills - The commercial bills were established with the restructure of the Group in FY17, only one commercial bill remains, amortising approx. $100k per month;
3. Equipment Finance - There are two equipment finance loans, both are amortising approx $100k per month;
4. Property Finance - $3.0m facility, amortising at approx. $100k per month; and
5. Property Construction Finance - $2.0m facility, not drawn at 30 June 2018, this loan will be used to complete the facility during FY19.
Earnings Per Share
Earnings Per Share (EPS) guidance of 2.0p per share was based on there being no tax expense for FY18, an exchange rate of AUD/GBP of 0.60 and a lower weighted average number of shares.
Guidance Normalised Actual
-------------------------- ------------- ------------ ------------
NPBT / NPAT 6,000,000 6,031,778 5,422,854
-------------------------- ------------- ------------ ------------
Weighted Avg # of Shares 174,428,086 174,428,086 178,681,952
-------------------------- ------------- ------------ ------------
EPS - AUD - Cents 3.44 3.46 3.03
-------------------------- ------------- ------------ ------------
AUD / GBP ER 0.60 0.60 0.57
-------------------------- ------------- ------------ ------------
EPS - GBP - Pence Approx. 2.00 2.07 1.74
-------------------------- ------------- ------------ ------------
Comparison of a normalised EPS calculation to the original guidance results in MRS generating an EPS of 2.07 pence per share, which is 4% above guidance. However, the effects of a higher than expected weighted average number of shares, decline in the exchange rate and $0.6m of tax expense, resulted in an EPS of 1.74 pence per share.
Management Resource Solutions PLC and Holdings (MRS) Pty Ltd
The combined continuing operating loss for the Group's "holding" companies for 2018 was $3.5m (2017: loss $1.6m). The increase in the loss is mainly due to HMRS having a tax expense of $1.1m in 2018, and a full year of operating and interest expense in 2018 (in 2017 HMRS operated from February 2018).
Management Resource Solutions Pty Ltd, MRS Guernsey Limited and MRS PNG Limited
Management Resource Solutions Pty Ltd, MRS Guernsey Limited and MRS PNG Ltd were placed into voluntary administration during FY17. MRS Guernsey Limited and MRS PNG Limited have been deregistered, and Management Resource Solutions Pty Ltd is in the process of being deregistered. There were no costs incurred in relation to these entities during FY18.
MRS Group Outlook
The markets which BPH and MRSSG service are the strongest they have been in years and trading during the early part of our 2019 financial year has been in line with expectations. BPH is currently working close to full capacity and has a strong pipeline of work to complete. MRSSG is experiencing strong end market demand. The Hunter Valley thermal coal price has been strong and stable providing confidence for the coal mines to commit to repairs and maintenance.
Our core management team, led by our CEO Paul Brenton, continues to perform at a very high level. The success of the Group will owe much to the consistency of leadership and the management team's dedication to delivering the Company's goals, and we are looking forward to another strong performance for FY19.
2018 has been a successful year and on behalf of the Board, I'd like to thank all employees for their continued commitment to working safely and to all stakeholders of MRS including our customers, suppliers, funders and shareholders for maintaining their support of the Company.
John Zorbas
Chairman
7 December 2018
DIRECTORS' REPORT
The Directors present their report and the audited financial statements for the year ended 30 June 2018.
Principal activities
The principal activities of the Group during the year were plant hire, equipment repair, refurbishment and fabrication, mine rehabilitation, earthmoving, road construction and other support services to a wide base of private and public-sector clients in Australia. The Group caters predominately for the mining, civil, engineering, construction and infrastructure industries.
Issue of Shares
Details of Ordinary Shares issued during the year are set out in notes 24 to 26 of the Financial Statements.
Share based payments
Share based payments are detailed in note 26 of the Financial Statements.
Results and dividends
The results for the year are set out on page 17.
The Directors do not recommend the payment of a dividend.
Business and financial review
All references to dollars or $ relate to Australian dollars, the Group's presentational currency.
A review of the business and future developments is given in the CEO's Statement and Strategic Report on page 2.
Revenue for the period amounted to $69.1 million (2017: $52.4 million).
Net profit after tax for the period amounted to $5.4 million (2017: loss of $10.8 million).
At 30 June 2018, the Group had net assets of $10.3 million (2017: $3.7 million).
Going concern
The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, at the time of approving the financial statements, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future.
In order to arrive at this opinion, the Directors have prepared detailed cash flow forecasts for the Group, which demonstrate that it will be able to meet its liabilities as they fall due for a period of at least twelve months from the date of approval of the financial statements.
Further information on the going concern assumption is provided in note 1 to the consolidated financial statements.
Key performance indicators
The Group's current key performance indicators are safety, building revenue and profitability, and expanding our diverse client base. Relevant information is reported in the Chairman's Statement and Strategic Report.
Principal risks and uncertainties
There are risks associated with the Group's business. The Board regularly reviews the risks to which the Group is exposed and has in place a strategy to mitigate these risks as far as possible. The following summary, which is not exhaustive, outlines some of the key risks and uncertainties facing the Group at its present stage of development:
1 General risks
Reliance on key management
The responsibility of overseeing the day-to-day operations and
the strategic management of MRS depends substantially on its
senior management and its key personnel. There can be no assurance
given that there will be no detrimental impact on MRS if one
or more of these employees cease their employment.
2 Risks relating to MRS's Businesses
2.1 General
2.1.1 Operating risks
The Group's business planning is carried out on the basis of
expected future work. The Group is reliant upon securing new
contracts. There is a risk that expected contracts will not
be won. The directors mitigate this risk by monitoring the pipeline
of future contracts.
The operations of MRS may be affected by various factors, including
operational and technical difficulties encountered in resources;
difficulties in commissioning and operating plant and equipment;
mechanical failure or plant breakdown; adverse weather conditions;
industrial and environmental accidents; industrial disputes;
and unexpected shortages or increases in the costs of consumables,
spare parts, or plant and equipment.
2.1.2 Additional requirements for capital
MRS's capital requirements depend on numerous factors. To fully
realise its growth plans MRS may require further financing.
Any additional equity financing will dilute shareholdings. Any
debt financing, if available, may involve restrictions on financing
and operating activities.
2.2 Specific
2.2.1 Personnel subject to workplace safety on client
sites
The Company's personnel deliver services on site. Consequently,
personnel may be subjected to risks to their health and safety
through the actions, inactions and negligence of third parties.
Numerous losses may stem from injury or death to personnel in
such a scenario and such losses may have an adverse effect on
MRS's profits, its results, its balance sheet and its financial
position.
Refer to Note 23 for Financial risk.
The Directors regularly monitor such risks and will take actions as appropriate to mitigate them. The Group manages its risks by seeking to ensure it is in compliance with the terms of its agreements, and through the application of appropriate policies and procedures, and via the recruitment and retention of a team of skilled and experienced professionals.
Directors
The Directors of the Company during the period were as follows:
Paul Brenton (appointed 21 December 2017)
Timothy Jones
John Zorbas
Joe Clayton (resigned 21 August 2017)
Trevor Brown (resigned 31 December 2017)
Nigel Burton (resigned 31 March 2018)
Details of the Director's remuneration are given in note 8 to the financial statements.
Directors' Interests, including family interests, in Ordinary Shares of the Company and in options and warrants to subscribe for Ordinary Shares were as follows (see note 24 - 26 for details of share based payment arrangements):
2018 2017
Ordinary Shares Number Number
Paul Brenton - N/A
Timothy Jones 480,573 480,573
John Zorbas 2,350,000 -
Trevor Brown N/A 6,000,000
Nigel Burton N/A 4,000,000
---------------------------------- ----------------------------------
2018 2017
Options (exercisable at 30p) Number Number
Paul Brenton - N/A
Timothy Jones 492,250 492,250
John Zorbas - -
----------------------------------
2018 2017
Options (exercisable at 7p) Number Number
Paul Brenton 2,000,000 N/A
Timothy Jones - -
John Zorbas - -
---------------------------------- ----------------------------------
2018 2017
Warrants (exercisable at 30p) Number Number
Paul Brenton - N/A
Timothy Jones - 133,333
John Zorbas - -
----------- ------------------------------
2018 2017
Warrants (exercisable at 8p) Number Number
Paul Brenton 2,000,000 N/A
Timothy Jones 4,000,000 -
John Zorbas - -
----------------------------- ----------
2018 2017
Warrants (exercisable at 5p) Number Number
Paul Brenton - N/A
Timothy Jones 360,000 360,000
John Zorbas 2,350,000 4,700,000
Trevor Brown N/A 2,000,000
Nigel Burton N/A 2,000,000
Joe Clayton N/A 2,500,000
----------------------------- ----------
Substantial Shareholdings
At 7 December 2018, the Company was aware of the following interests in 3% or more of the issued share capital of the Company:
%
Leon Hogan 8.9
URU Metals Limited 8.9
Karrabin Investments Pty Ltd 3.9
Daniel Smith 3.8
Charles Ross 3.8
Mohammad Arshad Munir 3.7
Macquarie Bank Ltd 3.4
John Zorbas (Director) 3.3
Dr Nigel Burton 3.3
Financial instruments
Details regarding the Group's use of financial instruments and their associated risks are given in note 23 to the consolidated financial statements.
Indemnity Provision for Directors
MRS has insurances to cover Directors' and Officers' liabilities for an amount of GBP10,000,000 which the Directors believe to be sufficient for the business.
Statement as to disclosure of information to auditors
All the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's Auditors for the purposes of their audit and to establish that the Auditors are aware of that information. The Directors are not aware of any relevant audit information of which the Auditors are unaware.
Auditors
James Cowper Kreston have expressed their willingness to continue in office and a resolution to re--appoint them will be proposed at the annual general meeting.
Approved by the Board of Directors on 7 December 2018 and signed on behalf of the Board by:
John Zorbas
Chairman
7 December 2018
DIRECTOR'S RESPONSIBILITIES FOR THE YEARED 30 JUNE 2018
The Directors are responsible for preparing the strategic report, the directors' report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and to prepare the parent company accounts in accordance with UK accounting standards including FRS 101 "Reduced Disclosure Framework". Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
-- Select suitable accounting policies and then apply them consistently; -- Make judgements and accounting estimates that are reasonable and prudent;
-- State whether the group accounts have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements;
-- State whether the parent company accounts have been prepared in accordance with applicable UK accounting standards, subject to any material departures disclosed and explained in the financial statements; and
-- Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website www.mrsplc.info in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF MANAGEMENT RESOURCE SOLUTIONS PLC
Opinion
We have audited the financial statements of Management Resource Solutions plc (the 'Company') for the year ended 30 June 2018 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated Cash Flow Statement, the Consolidated and Parent Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the consolidated financial statements is applicable law and International Financial Reporting Standards as adopted by the European Union. The financial reporting framework applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 "Reduced Disclosure Framework" (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
-- Give a true and fair view of the state of the Group and Parent Company's affairs as at 30 June 2018 and of the Group's profit for the year then ended;
-- Have been properly prepared in accordance with the financial reporting frameworks as outlined above; and
-- Have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for Opinion
We conducted our audit in accordance with International Standards of Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further discussed in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standards as applied to listed entities, and we have fulfilled our ethical responsibilities with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you were:
-- The directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; and
-- The directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Group and its environment, assessing the risks of material misstatement in the financial statements and planning and performing appropriate audit procedures in response to those risks.
All of the group's operations, management and accounting function reside in Australia. Accordingly, the majority of the audit work was undertaken by a local firm of auditors. We directed, supervised, and reviewed their work appropriately to enable us to form an opinion on the financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we not provide a separate opinion on these matters.
Revenue Recognition
Risk description
There is an inherent risk of misstatement of revenue in most trading business, whether amounting from fraud or error.
How the scope of our audit responded to the risk
To assess the appropriateness and completeness of revenue recognised in the year the following procedures were performed:
-- Examined a sample of revenue transactions by reference to underlying contractual terms;
-- Examined a sample of items of accrued revenue on incomplete projects by reference to contractual terms, stage of completeness and subsequent invoices;
-- Considered the appropriateness and application of the company's accounting policy for revenue recognition; and
-- Considered the disclosures in the financial statements regarding revenue.
Key observations
The results of our testing were satisfactory and we consider the disclosure surrounding revenue to be appropriate.
Property, plant and equipment
Risk description
The group holds a material amount of property, plant and equipment (PPE) which are held in various physical locations. There are various risks associated including existence, valuation and impairment risk.
How the scope of our audit responded to the risk
Testing was performed on a sample basis to obtain assurance that assets existed and were recorded at an appropriate value.
Key observations
The results of our testing were satisfactory.
Our application of materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decision of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgements we determined materiality for the financial statements as a whole to be $400,000 (2017: $800,000). The key driver for the materiality calculation was profit before taxation but we also considered the appropriateness of this figure in the context of the reported revenue for the year, and the balance sheet.
We agreed with the directors that we would report all audit difference in excess of $20,000 (2017: $40,000) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report on disclosure matters that we identified when assessing the overall presentation of the financial statements.
Other information included in the annual report
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially misstated. If we identify such material inconsistencies or apparent material misstatement, we are required to determine whether there is a material misstatement in the financial statement or a material misstatement in the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report this fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-- The information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared are consistent with the financial statements; and
-- The strategic report and the directors' report have been prepared in accordance with the applicable legal requirements.
Matter on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to the financial statements which the Companies Act 2006 require to report to you if, in our opinion:
-- Adequate accounting records have not been kept, or returns adequate for the audit have not been received from branches not visited by us; or
-- The financial statements are not in agreement with the accounting records and returns; or -- Certain disclosures of directors' remuneration specified by law are not made; or -- We have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 12 the directors' are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors' either intend to liquidate the Company or to cease operating, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decision of users taken on the basis of these financial statements.
A further description of our responsibility for the audit of the financial statements is located on the Financial Reporting Council's website at: frc.org.uk. This description forms part of our auditors' report.
Use of our report
This report is made solely to the Company's member, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's member those matters we are required to state to them in an Auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Alan Poole BA (Hons) FCA (Senior Statutory Auditor)
For and on behalf of
James Cowper Kreston
Statutory Auditors
Reading
7 December 2018
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEARED 30 JUNE 2018
2018 2017
Note $'000 $'000
Revenue 4 69,075 52,363
Cost of sales (45,969) (39,553)
--------- ----------
Gross profit 23,106 12,810
Recurring administrative expenses (14,423) (20,310)
--------- ----------
Profit/(loss) before non-recurring
costs and finance charges 8,683 (7,500)
Non-recurring administrative
expenses:
Acquisition expenses - (972)
Share based payment charges 26 (370) (241)
Operating profit/(loss) 6 8,313 (8,713)
Finance costs - interest 10 (2,281) (1,901)
Profit/(loss) before tax 6,032 (10,614)
Tax expense 11 (609) (492)
--------- ----------
Profit/(loss) for the year attributable
to equity holders of the parent
company 5,423 (11,106)
Profit from discontinued operations 16 - 321
--------- ----------
Profit/(loss) for the year attributable
to equity holders of the parent
company 5,423 (10,785)
==========
Earnings per share 13
Continuing Operations
Basic 3.02c (12.99)c
Diluted 2.62c (12.99)c
Discontinued Operations
Basic - 0.38c
Diluted - 0.38c
Total
Basic 3.02c (12.61)c
Diluted 2.62c (12.61)c
========= ==========
There was no other comprehensive income for the year (2017: Nil).
CONSOLIDATED BALANCE SHEET FOR THE YEARED 30 JUNE 2018
2018 2017
Note $'000 $'000
Assets
Non-current assets
Property, plant and equipment 14 29,114 17,574
Deferred Tax 17 1,613 -
30,727 17,574
Current assets
Trade and other receivables 18 16,725 17,536
Cash and cash equivalents 50 2,029
Tax - 141
Inventories 19 1,968 590
18,743 20,296
Total assets 49,470 37,870
--------- ---------
Liabilities
Current liabilities
Trade and other payables 20 14,623 13,223
Provisions 21 1,502 1,454
Borrowings 22 16,025 11,127
32,150 25,804
Non-current liabilities
Borrowings 22 4,522 7,971
Deferred tax 17 2,222 -
Provisions 21 299 373
7,043 8,344
Total liabilities 39,193 34,148
--------- ---------
Net assets 10,277 3,722
========= =========
Equity attributable to equity
holders of the parent
Share capital 24 38,840 38,711
Share premium 27 17,442 16,808
Issue costs reserve 27 (332) (332)
Reorganisation reserve 27 (36,032) (36,032)
Retained earnings 27 (9,641) (15,433)
--------- ---------
Total equity attributable to
equity holders of the parent 10,277 3,722
========= =========
The financial statements were approved by the Board of Directors
and authorised for issue on 7 December 2018 and were signed on
its behalf by:
Paul Brenton
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30 JUNE 2018
Issue
Share Share costs Reorganisation Retained Total
Capital Premium reserve reserve earnings equity
$'000 $'000 $'000 $'000 $'000 $'000
At 1 July 2016 36,677 1,744 (332) (36,032) (4,889) (2,832)
Loss for the
Year - - - - (10,785) (10,785)
Total comprehensive
income - - - - (10,785) (10,785)
--------- --------- --------- --------------- ---------- ---------
Other Movements
Issue of Shares 2,034 15,972 - - - 18,006
Share based
payments charge - - - - 241 241
Expenses of
issue - (908) - - - (908)
--------- --------- --------- --------------- ---------- ---------
Total other
movements 2,034 15,064 - - 241 17,339
At 1 July 2017 38,711 16,808 (332) (36,032) (15,433) 3,722
--------- --------- --------- --------------- ---------- ---------
Profit for
the Year - - - - 5,423 5,423
--------- --------- --------- --------------- ---------- ---------
Total comprehensive
income - - - - 5,423 5,423
--------- --------- --------- --------------- ---------- ---------
Other Movements
Issue of Shares 129 634 - - - 763
Share based
payments charge - - - - 369 369
--------- --------- --------- --------------- ---------- ---------
Total other
movements 129 634 - - 369 1,132
At 30 June
2018 38,840 17,442 (332) (36,032) (9,641) 10,277
========= ========= ========= =============== ========== =========
CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEARED 30 JUNE 2018
2018 2017
$'000 $'000
Cash flow from operating activities
Receipts from customers 77,741 54,967
Payments to suppliers and employees (63,523) (71,940)
Finance costs (2,281) (1,945)
Tax paid - (610)
--------- ---------
Net cash flow from operating activities 11,937 (19,528)
--------- ---------
Cash flow from investing activities
Purchase of SubZero non-current
assets - (4,200)
Net (purchase)/disposal of non-current
assets (10,654) 207
--------- ---------
Net cash flow from investing activities (10,654) (3,993)
--------- ---------
Cash flow from financing activities
Net (repayment of)/proceeds from
borrowings (5,038) 3,684
Proceeds from debtor finance 1,013 3,633
Proceeds from issue of shares net
of costs 763 17,339
--------- ---------
Net cash flow from financing activities (3,262) 24,656
--------- ---------
Net (decrease)/increase in cash
held (1,979) 1,135
Cash and cash equivalents at beginning
of the year 2,029 894
--------- ---------
Cash and cash equivalents at the
end of the year 50 2,029
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARED 30 JUNE 2018
1. Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to the periods presented, unless otherwise stated.
These financial statements have been prepared on the historical cost basis, on the basis of going concern and in line with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations issued by the International Accounting Standards Board ("IASB") adopted by the European Union and in accordance with applicable UK law.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. See note 2 for more details.
Going concern
The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, at the time of approving the financial statements, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future.
The Directors note, that as at 30 June 2018, current liabilities of $32.1m exceed current assets of $18.7m by $13.4m. Notwithstanding this deficiency, the Directors are confident that the Group will be able to pay its debts as and when they all due and payable upon consideration of:
-- the operating cash flows forecast to be generated by the Company over the next twelve months from the date of signing the annual report; and
-- the composition of the current liabilities and likelihood of the company being required to repay them over the next twelve months.
Based on the above, the Directors consider there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable, and therefore the going concern basis of preparation is considered to be appropriate for the financial report for the year ended 30 June 2018 (as indicated in the Chairman's Report).
The Group enjoys a strong relationship with its financiers, and the Directors believe they would be able to undertake a combination of the following courses of action should additional funding be required:
-- Continue the close relationship with the bank and restructure existing financial obligations;
-- Negotiate alternate financing arrangements; and -- Access additional equity funding.
The Directors believe that the Group will be successful in managing the above matters and accordingly, they have prepared the financial report on a going concern basis.
Basis of consolidation
Where the Group has control over an investee, it is classified as a subsidiary. The Group controls an investee if all three of the following elements are present: power over an investee, exposure to variable returns from the investee, and the ability of the investor to use its power of affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control. Subsidiaries are fully consolidated from the date that control commences until the date that control ceases. The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between Group companies are therefore eliminated in full.
Business combinations
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair value at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.
The Company was incorporated on 26 April 2012 for the purpose of acquiring the entire issued share capital of Management Resource Solutions Pty Ltd, which was previously the ultimate parent company of the Group. This acquisition took place on 24 August 2012 by the issue of the entire ordinary share capital of the Company to the shareholders of Management Resource Solutions Pty Ltd in exchange for their shareholdings in the Company.
This reconstruction is accounted for as an acquisition under common control. Accordingly, the financial statements present the Group results as a continuation of the results of the Group previously headed by Management Resource Solutions Pty Ltd.
Corporate Income Tax
The income tax expense for the year comprises current income tax expense and deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities are measured at the amounts expected to be paid to the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.
Current and deferred income tax expense is charged or credited outside the profit and loss when the tax relates to items that are recognised outside the profit and loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the Company in a business model whose objective is to consume substantially all of the economic benefits embodies in the property through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Discontinued operations
Discontinued operations represent cash generating units that have been placed into voluntary administration and ceased operating. The post-tax profit or loss of the discontinued operation is presented as a single line on the face of the consolidated income statement. The presentation of discontinued operations within prior periods is restated to reflect consistent classification of discontinued operations across all periods presented.
Operating segments
IFRS 8 "Operating Segments" requires the disclosure of segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Group considers that the role of chief operating decision-maker is performed collectively by the Board of Directors.
Management Resource Solutions plc is a holding company that operates two businesses in Australia, Plant Hire and Mining Contracting. Its customers are based in Australia.
Financial information (including revenue and profit before tax and intra-group charges) is reported to the Board on a segmental basis. Segment revenue comprises sales to external customers and excludes gains arising on the disposal of assets and finance income. Segment profit reported to the Board represents the profit earned by each segment before tax and intra-group charges. For the purposes of assessing segment performance and for determining the allocation of resources between segments, the Board reviews the non-current assets attributable to each segment as well as the financial resources available. All assets are allocated to reportable segments. Assets that are used jointly by segments are allocated to the individual segments on a basis of revenues earned.
All liabilities are allocated to individual segments. Information is reported to the Board of directors on a segmental basis as management believes that each segment exposes the Group to differing levels of risk and rewards due to their varying business life cycles. The segment profit or loss, segment assets and segment liabilities are measured on the same basis as amounts recognised in the financial statements. Each segment is managed separately.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities, where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
Property, Plant and Equipment
Property, plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset.
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the fair value of the consideration given over the fair value of the identifiable net assets acquired. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate potential impairment. The carrying value of goodwill is compared with the recoverable amount, which is the higher of the value in use and the fair value less costs to sell. Any impairment is recognised immediately as an expense, separately disclosed in the intangible fixed asset note to the financial statements, and is not subsequently reversed.
Where the fair value of the identifiable net assets acquired exceeds the fair value of the consideration given, the excess is recognised as a gain in the Consolidated Statement of Profit & Loss.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets is depreciated on a straight-line basis over the asset's useful life to the Consolidated Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
Leasehold improvements 5% straight line
-------------------------
Plant and equipment for hire 4 - 50% reducing balance
-------------------------
Leased plant and equipment 40% straight line
-------------------------
Office equipment 5 - 50% straight line
-------------------------
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.
Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset - but not the legal ownership - are transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses on a straight-line basis over the lease term.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. For financial assets this is equivalent to the date that the Group commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified 'at fair value through profit or loss' in which case transaction costs are expensed to profit or loss immediately.
Impairment
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use to the asset's carrying amount. Any excess of the asset's carrying amount over its recoverable amount is recognised immediately in profit or loss.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each Group entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the functional currency for most of the group, and the presentational currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items are translated at the year - end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is directly recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Employee Benefits
An accrual is made for the Group's liability for employee benefits in relation to the Group's unpaid contribution to defined contribution schemes. The Group's obligations in respect of defined contribution pension schemes are recognised as a cost in the consolidated statement of profit and loss.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.
Revenue and Other Income
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of completion is determined with reference to the services performed to date as a percentage of total anticipated services to be performed, based on surveys of work performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure is recoverable.
All revenue is stated net of VAT and similar taxes.
Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to note 2 for further discussion on the determination of impairment losses.
Inventories
Raw materials, stores, and work in progress are stated at the lower of cost and net realisable value. Cost comprises direct materials, and direct labour. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period.
Borrowing Costs
Borrowing costs are recognised in the consolidated statement of profit and loss for the period in which they are incurred.
Goods and Services Tax (GST), Value Added Tax (VAT) and equivalent taxes
Revenues, expenses and assets are recognised net of the amount of GST and VAT, except where the amount of GST or VAT incurred is not recoverable GST or VAT.
Rounding
Amounts in the financial statements have been rounded off in accordance with the instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Recent accounting developments, new standards, amendments and Interpretations
(a) Standards, amendments and interpretations effective in 2018 and applied by the Group:
The Company has adopted the following revisions and amendments to IFRS issued by the International Accounting Standards Board, which are relevant to and effective for the Company's financial statements for the period beginning 1 July 2017:
-- IFRS 2 Share--based Payment -- Definitions of vesting conditions;
-- IFRS 5 Non--current Assets Held for Sale and Discontinued Operations -- Changes in methods of disposal;
-- IFRS 7 Financial Instruments: Disclosures -- Servicing contracts;
-- IFRS 7 Financial Instruments: Disclosures -- Applicability of the offsetting disclosures to condensed interim financial statements;
-- IFRS 8 Operating Segments -- Aggregation of operating segments;
-- IFRS 8 Operating Segments -- Reconciliation of the total of the reportable segments' assets to the entity's assets;
-- IFRS 11 Accounting for Acquisitions of Interests in Joint Operations - Amendments to IFRS 11;
-- IFRS 12 Disclosure of Interests in Other Entities -- Clarification of the scope of the disclosure requirements in IFRS 12;
-- IFRS 14 Regulatory Deferral Accounts; -- IAS 1 Disclosure Initiative Amendments to IAS 1; -- IAS 7 Disclosure Initiatives - Amendments to IAS 7; -- IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses - Amendments to IAS 12;
-- IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation; Amendments to IAS 16 and IAS 38;
-- IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets -- Revaluation method -- proportionate restatement of accumulated depreciation/amortisation; -- IAS 19 Employee Benefits -- Discount rate: regional market issue; -- IAS 24 Related Party Disclosures -- Key management personnel; -- IAS 27 -- Equity Method in Separate Financial Statements -- Amendments to IAS 27; and
-- IAS 34 Interim Financial Reporting - Disclosure of information elsewhere in the interim financial report.
The Directors have assessed that the adoption of these revisions and amendments did not have an impact on the financial position or performance of the Group and Company.
(b) Standards, amendments and interpretations that are not yet effective and have not been early adopted:
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:
Effective date - periods beginning on or after 1 January 2018 (except IFRS 16 Effective 1 January 2019).
-- IFRS 2 Classification and Measurement of Share based Payment Transactions -- Amendments to IFRS 2;
-- IFRS 9 Financial Instruments; -- IFRS 15 Revenue from Contracts with Customers; -- IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration;
-- AIP IFRS 1 First--time Adoption of International Financial Reporting Standards -- Deletion of short--term exemptions for first--time adopters;
-- AIP IAS 28 Investments in Associates and Joint Ventures -- clarification that measuring investees at fair value through profit or loss is an investment -- by -- investment choice; and
-- IFRS 16 Leases.
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group and Company.
2. Critical Accounting Estimates and Judgements
The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.
Key estimates and judgements
(I) Impairment
The Group assesses impairment at the end of each reporting period by evaluation of conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations, which incorporate various key assumptions.
(II) Revenue recognition
Revenue on long-term contracts requires estimates to be made of the degree of completion and accordingly the amount of revenue and direct costs to recognise at accounting dates.
(III) Going concern
As explained in the accounting policy set out in note 1, the financial statements have been prepared on a going concern basis which assumes that the Group will continue in operational existence for the foreseeable future.
3. Revenue
Revenue represents amounts invoiced to customers for services provided, exclusive of VAT and similar taxes.
4. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Board of Directors.
Segmental information is as follows:
2018 Australian Australian Total Discontinued Total
Plant Mining Continuing Operations
Hire Contracting Operations
and Bulk
Earthworks Corporate
$'000 $'000 $'000 $'000 $'000 $'000
Revenue 22,611 46,464 - 69,075 - 69,075
Cost of sales (14,134) (31,835) - (45,969) - (45,969)
Administration
expenses (1,271) (9,375) (2,408) (13,054) - (13,054)
Depreciation (3,145) (867) (8) (4,020) - (4,020)
Operating
profit/(loss)
before tax 4,061 4,387 (2,416) 6,032 6,032
------------ -------------------- ---------- ------------ ------------- ---------
Income tax
expense (110) 582 (1,081) (609) - (609)
------------ -------------------- ---------- ------------ ------------- ---------
Operating
profit/(loss)
after tax 3,951 4,969 (3,497) 5,423 - 5,423
============ ==================== ========== ============ ============= =========
Capital Expenditure 4,080 7,799 3,812 15,691 15,691
Segment assets 24,255 18,417 6,798 49,470 - 49,470
Segment liabilities (10,673) (21,710) (6,810) (39,193) - (39,193)
------------ -------------------- ---------- ------------ ------------- ---------
2017 Australian Australian Corporate Total Discontinued Total
Plant Mining Contracting Continuing Operations
Hire Operations
and Bulk
Earthworks
$'000 $'000 $'000 $'000 $'000 $'000
Revenue 22,208 30,061 93 52,363 3,624 55,988
Cost of sales (16,149) (23,405) - (39,553) (6,492) (46,046)
Administration
expenses (1,194) (13,208) (5,616) (20,017) (2,816) (22,834)
Depreciation (2,839) (568) - (3,407) (20) (3,427)
Gain on distressed
debt - - - - 6,025 6,025
Operating
profit/(loss)
before tax 2,026 (7,120) (5,522) (10,614) 321 (10,292)
------------ -------------------- ---------- ------------ ------------- ---------
Income tax
expense (492) - - (492) - (492)
------------ -------------------- ---------- ------------ ------------- ---------
Operating
profit/(loss)
after tax 1,534 (7,120) (5,522) (11,106) 321 10,785
============ ==================== ========== ============ ============= =========
Capital Expenditure 3,659 4,346 - 8,005 - 8,005
Segment assets 19,711 13,984 4,175 37,870 - 37,870
Segment liabilities (8,831) (18,973) (6,344) (34,148) - (34,148)
------------ -------------------- ---------- ------------ ------------- ---------
Revenues from transactions with customers exceeding 10% of total revenue were as follows:
2018 2017
$'000 $'000
Customer A 12,792 13,555
Customer B 10,120 8,402
Customer C - 7,936
Customer D - 5,687
Others 46,163 16,783
69,075 52,363
All revenue is generated in Australia.
5. Administrative expenses
Details of the share based payments charge are set out in note 26.
6. Operating profit
2018 2017
$'000 $'000
Operating profit is stated after
charging the following:
Depreciation and amortisation 4,030 3,427
Impairment losses - 2,914
Foreign exchange differences 15 612
------ ------
7. Auditors' remuneration
2018 2017
$'000 $'000
Fees payable to the Group's auditors
for audit of the annual accounts:
Audit of the Company and the consolidation 49 51
Audit of subsidiaries by other auditors 233 235
------ ------
Fees payable to the Group's auditors
for other services:
Tax services 3 15
------ ------
Total fees payable to Group Auditors 285 301
====== ======
8. Staff costs and directors' emoluments
2018 2017
$'000 $'000
Staff costs (including directors)
- Group
Wages and salaries 39,102 33,602
Pension costs 2,483 2,049
Social security costs 2,147 551
------- -------
43,732 36,202
======= =======
The remuneration of the directors was as follows:
2018 Salaries Other Share based Total
& fees benefits payments
$'000 $'000 $'000 $'000
Directors' emoluments - Group
Paul Brenton (appointed 21 December
2018) 233 - 26 259
Timothy Jones 130 - 88 218
Joe Clayton (resigned 21 August
2017) 287* - - 287
John Zorbas (appointed 10 April
2017) 98 - - 98
Trevor Brown (resigned 31 December
2017) 72 104* 80 256
Nigel Burton (resigned 31 March
2018) 87 116* 72 275
907 220 266 1,393
--------- --------------- ---------------- ------
* includes termination pay
2017 Salaries Other Share based Total
& fees benefits payments
$'000 $'000 $'000 $'000
Directors' emoluments - Group
Paul Morffew (removed 28 October
2016) 163 108 40 311
Murray D'Almeida (resigned 17
March 2017) 247 - - 247
Chris Berkefeld (resigned 10
April 2017) 93 - 11 104
Timothy Jones 76 1 7 84
Joe Clayton (appointed 19 December
2016, resigned 21 August 2017) 249 470** 51 770
John Zorbas (appointed 10 April
2017) 15 - 17 32
Trevor Brown (appointed 10 April
2017) 26 - 7 33
Nigel Burton (appointed 10 April
2017) 131 1 7 139
1,000 580 140 1,720
--------- ---------- ------------ ------
** includes provision for termination pay
The key management personnel of the Group are considered to be the Directors of Management Resource Solutions PLC.
9. Staff Numbers
The average monthly number of employees (including directors) during the year was as follows:
2018 2017
Number Number
Group
Technical 335 352
Administrative 46 58
381 410
Company
Administrative 2 2
------- -------
10. Finance costs
2018 2017
$'000 $'000
Interest expense 2,281 1,901
------ ------
11. Taxation
(a) The tax charge comprises
2018 2017
$'000 $'000
Current tax - 492
Deferred tax 609 -
609 492
(b) Reconciliation of total
tax charge
2018 2017
$'000 $'000
Accounting profit/(loss) from continuing
operations before income tax 3,248 322
Accounting profit/(loss) from discontinued
operations before income tax - (10,614)
Total accounting profit/(loss) before
income tax 3,248 (10,292)
Tax at Australian statutory income
tax rate of 30% (2017 - 30%) 974 (3,088)
Effects of:
- Unrecognised tax losses - 3,580
- Income tax adjusted for permanent 1 -
differences
- Deferred tax balances now brought (366) -
to account
------ ---------
Tax (credit)/charge 609 492
12. Dividend Paid
2018 2017
$'000 $'000
No dividends were paid during - -
the year
-------- --------
13. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings for the purposes of earnings per share:
2018 2017
$'000 $'000
From continuing operations 5,423 (11,106)
From discontinued operations - 321
5,423 (10,785)
Weighted average number of shares for the purposes
of earnings per share:
2018 2017
Number Number
Weighted average number of ordinary
shares in issue 179,272,612 85,482,507
------------ -----------
Weighted average number of diluted 206,666,319 -
shares
------------ -----------
14. Property, Plant and Equipment
Leased Total
Leasehold Plant & Land & plant &
improvements equipment Buildings equipment
$'000 $'000 $'000 $'000 $'000
Cost
At 1 July 2016 6 15,898 - 260 16,164
Additions - 3,805 - - 3,805
Acquired - 4,200 - - 4,200
Disposals (6) (430) - (260) (696)
------------- ---------- ----------
At 30 June 2017 - 23,473 - - 23,473
Additions - 10,337 3,370 - 13,707
Acquired - - - - -
Disposals - (157) - - (157)
Capital WIP - 1,984 - - 1,984
------------- ----------
At 30 June 2018 - 35,637 3,370 - 39,007
------------- ---------- ---------- ---------- -------
Depreciation
At 1 July 2016 6 2,584 - 170 2,760
Charge for the year - 3,415 - 12 3,427
Eliminated on disposals (6) (100) - (182) (288)
----------
At 30 June 2017 - 5,899 - - 5,899
Charge for the year - 4,021 9 - 4,030
Eliminated on disposals - (36) - - (36)
-------------
At 30 June 2018 - 9,885 9 - 9,893
------------- ---------- ---------- ---------- -------
Net book value
------------- ----------
At 30 June 2018 - 25,753 3,361 - 29,114
------------- ---------- ---------- ---------- -------
At 30 June 2017 - 17,574 - - 17,574
============= ========== ========== ========== =======
15. Subsidiaries
The consolidated financial statements include the financial statements
of Management Resource Solution PLC and the following subsidiaries:
Proportion of voting rights
and of equity interest
2018 2017
Management Resource Solutions
Pty Ltd Australia 100% 100%
MRS PNG Limited (deregistered
on 28 September 2017) UK Nil 100%
MRS Guernsey Limited (deregistered
on 8 December 2017) Guernsey Nil 100%
Bachmann Plant Hire Pty Ltd Australia 100% 100%
MRS Services Group Pty Ltd Australia 100% 100%
Holdings (MRS) Pty Ltd Australia 100% 100%
MRS Property No1 Pty Ltd Australia 100% Nil
16. Discontinued Operations
Management Resource Solutions Pty Ltd, MRS Guernsey Limited and
MRS PNG Limited were placed into Voluntary Administration during
FY17.
In accordance with IFRS 5 the total profits for 2017 relating
to discontinued activities for the year were presented on a single
line on the income statement, and are analysed below:
2018 2017
$'000 $'000
Revenue 3,624
Cost of sales - (3,578)
-------- --------
Gross profit - 46
Recurring administrative expenses - (2,194)
-------- --------
Profit before non-recurring costs and
finance charges - (2,148)
Non-recurring administrative expenses:
Acquisition expenses - (598)
Amounts written off on terminated contracts - (2,914)
Share based payment charges - -
Gain on forgiveness of distressed debt - 6,025
Impairment on investments - -
Operating Profit / (Loss) - 365
Finance costs - interest - (44)
Profit / (Loss) before tax - 321
Tax (expense)/credit - -
Profit / (Loss) from discontinued operations - 321
======== ========
2018 2017
$'000 $'000
Cash flow from operating activities
Receipts from customers - 9,691
Payments to suppliers and employees - (13,243)
Interest received - -
Finance costs - (44)
Tax paid - 25
Net cash flow from operating activities - (3,570)
-------- ---------
Cash flow from investing activities
Net proceeds from investment - 4,140
Net proceeds from other non-current
assets - 29
Net cash flow from investing activities - 4,169
-------- ---------
Cash flow from financing activities
Net proceeds from intercompany loans - 3,060
Net proceeds from debt forgiveness - (3,844)
-------- ---------
Net cash flow from financing activities - (784)
Net increase/(decrease) in cash held - (186)
-------- ---------
Cash and cash equivalents at beginning
of the year - 186
Cash and cash equivalents at end of - -
the year
======== =========
16. Deferred Tax
Opening (Charged)/ (Charged)/ Closing
Balance Credited Credited Balance
to Profit/Loss to Directly
to Equity
$'000 $'000 $'000 $'000
Deferred tax assets
Timing differences - - - -
Balance at 30 June 2017 - - - -
----------- ---------------- ------------- ---------
Tax losses carried forward - 507 - 507
Timing differences - 1,106 - 1,106
Balance at 30 June 2018 - 1,613 - 1,613
=========== ================ ============= =========
Deferred tax liability
Timing differences - - - -
Balance at 30 June 2017 - - - -
----------- ---------------- ------------- ---------
Timing differences - 2,222 - 2,222
Balance at 30 June 2018 - 2,222 - 2,222
=========== ================ ============= =========
17. Trade and other receivables (current)
2018 2017
$'000 $'000
Trade receivables 12,856 14,615
Prepayments 307 21
Accrued Income 1,721 1,640
Other receivables 1,841 1,260
16,725 17,536
Included within trade receivables were retentions of $299,446
(2017: $124,573).
The Company's ageing of trade receivables is as follows:
2018 2017
$'000 $'000
Current 7,849 10,191
1 - 30 days 3,123 2,896
31 - 60 days 1,070 755
61 - 90 days 255 616
> 90 days 494 806
Retentions 299 125
Provision for bad and doubtful debts (234) (774)
12,856 14,615
18. Inventories
2018 2017
$'000 $'000
The Company's inventory is as follows:
Raw materials, stores and work
in progress 1,968 590
------ ------
19. Trade and other payables (current)
2018 2017
$'000 $'000
Trade creditors and accruals 4,338 2,656
Other creditors 8,647 7,911
Owing to a former Director - 450
BPH Acquisition - Working Capital
Loan 1,638 1,706
Current Liabilities - BPH Earnout
Payments - 500
14,623 13,223
20. Provisions
2018 2017
$'000 $'000
Employee benefits provision:
Current 1,502 1,454
Non-current 299 373
------ ------
1,801 1,827
21. Borrowings
2018 2017
$'000 $'000
Current
Lease liability secured 4,905 3,364
Debtor Financing 7,087 6,075
Bank loans 4,033 1,688
Total current borrowings 16,025 11,127
------- -------
Non-Current
Lease liability secured 3,717 6,181
Bank loans 805 1,790
Total non-current borrowings 4,522 7,971
------- -------
Total Borrowings 20,547 19,098
======= =======
Assets pledged as security are:
Plant and equipment - -
Leased plant and equipment 13,460 13,023
13,460 13,023
======= =======
Analysis of borrowings and lease
liabilities by maturity is as follows
0 - 6 months 11,155 8,312
6 - 12 months 3,269 2,815
1 - 2 years 5,904 5,273
2 - 5 years 219 2,698
20,547 19,098
=======
22. Financial Instruments
The Group's financial instruments consist of deposits with banks, money market instruments, short-term investments, accounts receivable and payable, and borrowings. The totals for each category of financial instrument, measured in accordance with IAS 39 as detailed in the accounting policies to these financial statements, are as follows:
2018 2017
$'000 $'000
Financial assets
Cash and cash equivalents 50 2,029
Receivables 14,697 15,875
Total Financial Assets 14,747 17,904
======= =======
Financial liabilities
Trade and other payables 14,623 14,536
Borrowings 20,547 19,098
Total Financial Liabilities 35,170 33,634
======= =======
In the opinion of the Directors, the fair value of the financial assets and financial liabilities is the same as the amount stated above.
Financial Risk Management/Capital Management Policies
The Directors' overall risk management strategy seeks to assist the Company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board of Directors on a regular basis. These include the credit risk policies and future cash flow requirements.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk and liquidity risk. There have been no substantive changes in the types of risks the Company is exposed to, how these risks arise, or the Board's objectives, policies and processes for managing or measuring the risks from the previous period.
a. Credit Risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group. The Group is also exposed by its concentration on a small number of major clients. The Group's maximum exposure to credit risk is its total receivables.
Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and includes the utilisation of systems for the approval, granting and renewal of credit limits, the regular monitoring of exposures against such limits and the monitoring of the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment. Depending on the division within the Group, credit terms are generally 15 to 30 days from the date of invoice.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the finance committee has otherwise assessed as being financially sound. Where the Group is unable to ascertain a satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient value which can be claimed against in the event of any default.
23. Financial Instruments
b. Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
-- preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;
-- managing credit risk related to financial assets; -- only investing surplus cash with major financial institutions; and
-- comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
At the balance sheet date, the Group's only borrowings were those set out in note 22 and all cash resources were available on demand.
24. Share Capital
Authorised, issued and fully Ordinary Deferred
paid Shares Shares
Number $'000 Number $'000
At 1 July 2017 174,428,086 2,491 30,400,015 36,220
Earn-out payment to G Bachmann 3,167,916 48 - -
Warrants exercised by John Zorbas,
director 2,350,000 36 - -
Warrants exercised by Trevor
Brown, director 2,000,000 29 - -
Warrants exercised by Nigel
Burton, director 1,000,000 16 - -
At 30 June
2018 182,946,002 2,620 30,400,015 36,220
============ ====== =========== =======
Nominal value per share EUR0.01
25. Warrants
In connection with its admission to listing on AIM on 11 December 2014, the Company issued 2,566,667 warrants to subscribe for new Ordinary Shares, at 30p per share, to investors and advisors. The Warrants were exercisable in whole or in part until the third anniversary of the admission to listing (11 December 2017) and are non-transferable. No warrants were exercised during the year and all have now lapsed.
On 5 May 2017, the company issued 10,407,120 warrants to subscribe for new ordinary shares in the company, at 5p per share, as follows:
Chris Berkefeld 547,120 warrants Vantage Performance 5,000,000 warrants Timothy Jones 360,000 warrants Paul Morffew 2,000,000 warrants
On 8 June 2017, the Company issued warrants to subscribe for new Ordinary Shares in the Company, subject to certain performance conditions, at 5p per share (the Non-Executive Director warrants), to the Company's directors as follows:
John Zorbas 4,700,000 warrants Trevor Brown 2,000,000 warrants Nigel Burton 2,000,000 warrants
On 21 December 2017, the Company issued warrants to subscribe for new ordinary shares in the Company, subject, in the case of those issued to Mr Jones, to certain performance conditions, at 8p per share to directors as follows:
Trevor Brown 1,000,000 warrants Timothy Jones 2,000,000 warrants
On 3 April 2018, the Company issued warrants to subscribe for new Ordinary Shares in the Company at 6.8p per share to a director as follows:
Nigel Burton 1,000,000 warrants
On 23 May 2018, the Company issued warrants to subscribe for new Ordinary Shares in the Company, subject to certain performance conditions, at 8p per share to directors as follows:
Paul Brenton 2,000,000 warrants Timothy Jones 2,000,000 warrants
Subject to the performance conditions attaching to certain warrants, all the above warrants are exercisable (in whole or in part) at any time up to the fifth anniversary of the date of issue, after which they will lapse.
The Group recognised a share based payment charge of $369,664 (2017: $241,395) in respect of the warrants (calculated using the Black-Scholes model). The inputs to the model were as follows:
Share Price 6.8p - 8.1p Exercise Price 6.8p - 8p Expected Volatility 75% Risk free rate of interest 0.5% Expected life 5 years During the year, the following Non-Executive Director warrants were exercised by directors: John Zorbas 2,350,000 warrants Trevor Brown 2,000,000 warrants Nigel Burton 1,000,000 warrants
No other warrants were exercised during the year. At 30 June 2018 a total of 19,257,120 warrants, representing 10.5% of the issued share capital of the Company were outstanding. No application has been made or will be made for the warrants to be admitted to trading on AIM. The weighted average excercise price of these warrants was 6.2p.
26. Share Options
Grant of options
On 11 December 2014, in connection with the admission to listing of the Company's Share Capital, a total of 3,264,417 options over ordinary shares of EUR0.01 in the capital of the Company ("Ordinary Shares") were granted to directors and employees of the company.
492,250 options, excercisable at 30p per share, granted to Timothy Jones, a director, were outstanding at 30 June 2018 and 30 June 2017. The other options lapsed following the resignation or termination of the employment of the option holders. The options are exercisable (in whole or in part) at any time up to the seventh anniversary of the date of the grant after which they will lapse.
On 12 March 2018, 2,000,000 options over Ordinary Shares were granted to Paul Brenton, a director, and a total of 4,900,000 options over Ordinary Shares were granted to employees and consultants. On 23 May 2018, a total of 1,000,000 options over Ordinary Shares were granted to employees. The options are excercisable (in whole or in part), subject to certain performance conditions, at any time up to the seventh anniversary of the date of the grant after which they will lapse. The exercise prices for the options granted on 12 March and 23 May are 7p and 8p per share respectively.
The group recognised a shared based payment charge of $65,225 (2017: $Nil) in respect of the options (calculated using the Black-Scholes Model). The inputs to the model were as follows:
Share price 6.8p - 8.1p Exercise price 7p - 8p Expected Volatility 75% Risk Free rate of interest 0.5% Expected life 7 years
At 30 June 2018, a total of 8,392,250 options, representing 4.6% of the issued share capital of the Company were outstanding. The weighted average exercise price of these options was 8.5p.
27. Reserves
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal
value.
Share premium Amount subscribed for share capital in excess
of minimal value, net of allowable expenses.
Issue costs reserve Costs associated with the reorganisation described
under "Business combinations: in note 1.
Reorganisation reserve Excess of the nominal value of shares issued
in exchange for the shares in Management Resource
Solutions Pty Ltd.
Retained earnings Cumulative net gains and losses recognised
in the statement of comprehensive income.
Details of movements in each reserve are set out in the Consolidated
Statement of Changes in Equity.
28. Leasing commitments
2018 2017
$'000 $'000
Finance lease commitments
Payable - minimum lease payments
no later than 12 months 5,229 3,686
between 12 months and two years 3,626 3,691
between two and five years 221 2,765
------ -------
Minimum lease payments 9,076 10,142
Less future finance charges 455 597
------ -------
Present value of minimum lease payment 8,622 9,545
====== =======
During February 2017 the Bachmann Plant Hire Pty Ltd "Rent to
Buy" agreement was finalised. For the periods February 2016 to
January 2017, the repayments of the "rent to buy" agreement were
treated as rental expense. From February 2017 the "rent to buy"
assets are recognised in the PP&E and the residual financial
liability is recognised as a finance lease. The "rent to buy"
assets are being depreciated over the residual rental period.
29. Related party transactions
Disclosure regarding remuneration of the Directors is given in note 8, and the Directors' Report. Details of the Group's subsidiaries, which are considered to be related parties, are given in note 15.
30. Contingent liabilities
No contingent assets or liabilities have been recognised.
31. Subsequent Events
There have been no material subsequent events that have not already been announced by the AIM RNS platform.
PARENT COMPANY BALANCE SHEET FOR THE YEARED 30 JUNE 2018
2018 2017
Notes $'000 $'000
Fixed assets
Investments in subsidiaries 4 - -
--------- ---------
Current assets
Trade and other receivables 5 10,044 7,002
Cash assets 40 715
10,084 7,717
--------- ---------
Total assets 10,084 7,717
--------- ---------
Current liabilities
Amounts falling due within
one year 6 (116) (270)
--------- ---------
Net assets 9,968 7,447
========= =========
Capital and reserves
Share capital 7 38,840 38,710
Share premium 17,442 16,807
Issue costs reserve (193) (193)
Reorganisation reserve (35,341) (35,341)
Retained earnings (10,780) (12,536)
Shareholders' funds 9,968 7,447
========= =========
The financial statements were approved by the board of Directors and authorised for issue on 7 December 2018 and were signed on its behalf by:
John Zorbas Paul Brenton Chairman Director
Company registration number 08046513
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018
Share Share Issue Reorganisation Retained Total
Capital Premium costs reserve earnings equity
reserve
$'000 $'000 $'000 $'000 $'000 $'000
At 1 July 2016 36,676 1,744 (193) (35,341) (6,854) (3,968)
Profit/(Loss)
for the Year - - - - (5,923) (5,923)
--------- --------- --------- --------------- ---------- --------
Total comprehensive
income - - - - (5,923) (5,923)
Other movements
Issue of Shares 2,034 15,972 - - - 18,006
Share based payments
charge - - - - 241 241
Expenses of issue - (909) - - - (909)
--------- --------- --------- --------------- ---------- --------
Total other movements 2,034 15,063 - - 241 17,338
At 30 June 2017 38,710 16,807 (193) (35,341) (12,536) 7,447
--------- --------- --------- --------------- ---------- --------
Profit/(Loss)
for the Year - - - - 1,387 1,387
--------- --------- --------- --------------- ---------- --------
Total comprehensive
income - - - - 1,387 1,387
Other Movements
Issue of Shares 130 635 - - - 765
Share based payments - - - - - -
charge
Expenses of issue - - - - 369 369
Total other movements 130 635 - - 369 1,133
At 30 June 2018 38,840 17,442 (193) (35,341) (10,780) 9,968
========= ========= ========= =============== ========== ========
NOTES TO THE PARENT COMPANY BALANCE SHEET FOR THE YEAR ENDED 30 JUNE 2018
1. Accounting policies
Basis of preperation
The accounts are prepared under the historical cost convention and in accordance with applicable UK accounting standards. Refer to the Group accounting policies save as outlined below.
The parent company financial statements have been prepared in accordance with Financial Reporting Standard 101 "Reduced Disclosure Framework" (FRS101).
As permitted by FRS101 no parent company cash flow statement has been presented. In addition, the following disclosure exemptions have been taken:
-- disclosure requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment; -- disclosure requirements of IFRS 7 Financial Instruments: Disclosures;
-- the requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of paragraph 73(e) of IAS 16 Property, Plant and Equipment;
-- disclosure requirements of paragraphs 134 to 136 of IAS 1 Presentation of Financial Statements in respect of capital management;
-- disclosure about the effects of new but not yet effective IFRSs under IAS 8; and
-- disclosure requirements in respect of the compensation of Key Management Personnel under IAS 24 Related Party Disclosures.
Investments
Investments are stated at cost less provision for any permanent diminution in value. Amounts receivable from subsidiary undertakings are assessed for impairment and provisions made where appropriate.
2. Loss attributable to members of the parent company
The profit dealt with in the financial statements of the parent company is $1,387,304 (2017: loss of $5,923,000). As permitted by s408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for the year.
3. Staff costs and directors' emoluments
These are disclosed in note 8 and 9 to the consolidated financial statements.
4. Investments in subsidiaries
2018 2017
$'000 $'000
Cost
At 1 July 2017 - -
------ ------
At 30 June 2018 - -
====== ======
Details of holdings in subsidiary companies are set out in note 15 to the consolidated financial statements.
5. Trade and other receivables
2018 2017
$'000 $'000
Other debtors - 10
Amounts owing by group undertakings 10,044 6,992
------- -------------------------
10,044 7,002
------- -------------------------
Amounts owing by group undertakings are repayable on demand and not interest bearing.
6. Creditors: amounts falling due within one year
$'000 $'000
Trade creditors and accruals (12) (39)
Other creditors (104) (231)
(116) (270)
--------- --------
Amounts owed by group undertakings are repayable on demand
and not interest bearing.
7. Share Capital
Details of the share capital are set out in note 24 to the consolidated financial statements.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR UBUKRWAAURRA
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December 07, 2018 04:32 ET (09:32 GMT)
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